Stringer: NYC budget sees debt service savings, but needs more reserve cushion
New York City has seen debt service savings in excess of $2 billion since 2014, but that the city must find more opportunities to cut costs, Comptroller Scott Stringer said at a press connference at the Dinkins Building in Manhattan Tuesday.
Unveiling his analysis of Mayor Bill de Blasio’s $95.3 billion fiscal 2021 preliminary budget and the financial plan, Stringer said it was balanced as presented.
He said, “as always the financial plan shows budget gaps in future years, rising to $2.7 billion in fiscal year 2024. But if you adjust for the use of surpluses from prior years to balance the budget, you can see that these gaps actually start now.”
Looking at a possible slowdown in economic activity in the future, Stringer took a cautious approach.
“We need to build up our reserve cushion and we need a more rigorous review of agency spending,” he said. “That’s how we will protect our most vulnerable communities. We simply have not done enough to root out inefficiencies, redundancies and waste. We have not done enough to prepare to weather a storm or something we could not even imagine. We have got to get our act together now.”
While the citywide savings plan has identified over $2 billion of savings over five years, over 90% of that is going to be used for new programs, he said, and “precious few dollars will remain for building up our budget cushion. The current savings plan is simply not enough.”
Looking at bond issuance and debt service, Stringer said his office has worked with the mayor’s Office of Budget and Management over the past six years to refinance outstanding debt and save the city $2.2 billion.
“These actions will save $315 million this year and over $271 million in 2021,” he said.
The city is one of the largest issuers of municipal debt in the United States. As of the end of the second quarter of fiscal 2020, the city had about $37.7 billion of general obligation debt outstanding. That's not counting the various city authorities that issue debt.
Moody’s Investors Service rates the city's GOs Aa1 and S&P Global Ratings and Fitch Ratings rate it AA. All three rating agencies assign stable outlooks to the GOs.
The NYC Transitional Finance Authority has $38.9 billion of debt outstanding while the NYC Municipal Water Finance Authority has $30.8 billion of debt outstanding. The TFA’s debt consists of future tax-secured senior bonds (Aaa/AAA/AAA), future tax-secured subordinate bonds (Aa1/AAA/AAA) and building aid revenue bonds (Aa2/AA/AA). The MWFA’s debt consists of general resolution bonds (A1/AAA/AA+) and second general resolution bonds (Aa1/AA+/AA+).
For fiscal 2020, the city has estimated total bond issuance of $8.61 billion, with sales of $9.9 billion in fiscal 2021, $11.3 billion in fiscal 2022, $12.7 billion in fiscal 2023 and $13.3 billion in fiscal 2024.
Starting next week, the 51-member city council will hold public hearings on the mayor's preliminary budget.
By the end of April, de Blasio will release his executive budget. The council will issue its response to that plan and then hold a second round of hearings after which they will negotiate adjustments with the mayor.
By law, the council must vote on a budget by July 1. The last four budgets were all approved ahead of schedule.